Amplats gains nearly R5bn in market value on upbeat trading update

Anglo American Platinum gained nearly R5bn in market value in early trading on the JSE on Friday after it said its full-year headline profit will more than double because of higher metal prices.

Its share price rose 3.83%, the most in two weeks, to R1,921.16, giving Amplats a market valuation of R509.57bn. Other PGM stocks were patchy on the day.

Amplats, a subsidiary of Anglo American and one of the world’s leading platinum producers, said that headline earnings per share would surge by between 146% and 166% in the 12 months ended December compared with the year earlier. This will translate into headline earnings of between R74.8bn and R80.8bn.

The PGM rand basket price rose 22% during the review period while sales volumes surged 82% after the group managed to clear out stockpiled material that could not be refined in the previous period due to failures at its converter plant.

“This was partially offset by an increase in purchase-of-concentrate costs, an increase in taxation and royalties, as well as higher mining and processing costs due to higher input inflation and increased production,” Amplats said.

PGM miners and resources companies have been in the sweet spot since 2021 when they reported bumper profits and boosted fiscal revenues through corporate income taxes and mining royalties.

However, commodity prices have since come off the boil after peaking in the first half of 2021. But PGM prices have been rising again since the start of the year in anticipation of the ramp-up in new vehicle production as computer chip supply shortages ease.

PGMs, which are largely made up of platinum, palladium, and rhodium, are used to clean the emissions of internal combustion engines, among other applications.

They are also likely to play a role in hydrogen fuel cells, which will be used to power vehicles and are an alternative to traditional petrol and diesel engines.

Resources companies have largely shied away from investing in new capacity that in the past decade hit prices and strained their balance sheet. In the upward current cycle, the management teams have opted to return cash to shareholders.

mahlangua@businesslive.co.za